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Gold/Mining/Energy : Harken Energy Corporation (HEC)

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To: Rod Copeland who wrote (3029)	6/18/1998 11:24:00 AM
From: oilstks	Read Replies (2) of 5504

ROD , After reviewing my notes from meeting I would like to add the following comments. On the stability of Colombian assets ; it was asked if it was so good down there , why are so many companies bailing out ? He said this was not true , in the case of Triton , he assumed they were actually just selling the company , not merely leaving the country . In the case of BP , they were not leaving the country at all , they are in fact aggressively trying to add to their holdings . The contract they returned (they did not like the terms) was later reacquired (I assume at better terms) . He stated BP was responsible for negotiating better contract terms for all companies . He further stated that 15 % of BP's reserves were in Columbia . This I feel is an excellent endorsement of investing in Columbia . He went out of his way to point out all the mis-truths about oil exploration in Colombia. He said that Harken gets 40 % (net-net) on their contracts. HEC takes 100% on a contract , until its proved commercial . At that time Ecopetrol can back in for 50% (after paying 50% of past and future costs). Harken must also pay a 20% royalty on production . This is how we get to 40% net-net ( 100%-20% = 80% /2=40% ) . These calculations were generalizations , given to clarify the complex contracts down there. Mikel also stated that the terms of contracts in Columbia were some of the best he could find anywhere. This was a revelation to me , I had assumed from all the posts etc , that they were poor terms . He stated that the fact that a company like Harken could acquire great amounts of acreage without bidding against the likes of BP and others was a great advantage. I was very encouraged by all this information and I am the proverbial skeptic(not easily impressed by the usual "Dog and pony shows") . I hope this helps. TOM

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